Multi-Year Guarantee Annuities (MYGA)

Comparing MYGAs to Other Fixed Annuity Options

Annuity Type	Interest Rate	Growth Potential	Principal Protection	Liquidity	Tax Deferral
MYGA	Guaranteed, fixed for entire term	Predictable, no market risk	Yes	Limited (during term)	Yes
Fixed Annuity	Guaranteed, often initial period only	Low to moderate, may adjust after intro	Yes	Limited (may allow partial withdrawals)	Yes
Fixed Index Annuity (FIA)	Linked to market index, with a minimum guarantee	Moderate, tied to index with caps/spreads	Yes	Limited (surrender period applies)	Yes

Retirement planning often involves choosing between several insured income options. A multi-year guarantee annuity (MYGA) offers a fixed interest rate for a set period—providing stability and predictability for those looking to grow their savings without exposure to market volatility.

What is a Multi-Year Guarantee Annuity?

A MYGA is a type of fixed annuity where you pay the insurance company a lump sum, and in return, they guarantee a fixed interest rate over a specific number of years, usually ranging from three to ten. This rate remains locked in for the entire surrender period. If you withdraw funds before the term ends, surrender charges may apply.

How MYGAs Differ from Other Fixed Annuities

Interest Rate Guarantee

• MYGA: The interest rate is set and guaranteed for the entire term—no surprises or fluctuations.
• Fixed Annuity: Often guarantees an initial interest rate, but after that period, rates may change depending on market conditions.

Rate Stability

• MYGA: Delivers steady, predictable growth—helpful for budgeting and planning.
• Fixed Annuity: Renewal rates may change after the guaranteed period, potentially reducing future returns.

Benefits of Multi-Year Guarantee Annuities

• Guaranteed Growth: Lock in a fixed rate for your chosen term, unaffected by market ups and downs.
• Safety and Security: MYGAs are backed by highly rated insurance companies and supported by state guaranty associations, offering strong principal protection.
• Tax Deferral: All interest grows tax-deferred until you withdraw, maximizing potential compounding.
• Predictable Income Stream: At the end of the term, you can convert your MYGA to guaranteed retirement income if desired.

Who Is a MYGA Right For?

Your Goal	Best Solution	Why Consider a MYGA?
Guaranteed, fixed growth with no market risk	MYGA	Fixed rate stays the same throughout your chosen term
Safe, tax-deferred accumulation	MYGA / Fixed Annuity	Interest grows tax-deferred until withdrawal
Flexible options after your term ends	MYGA / FIA	After the MYGA matures, roll to another MYGA, annuitize, or withdraw
Income you can’t outlive	Fixed Annuity / FIA (with income rider)	MYGAs can be annuitized; FIAs add more income features

Considerations Before Purchasing a MYGA

• Liquidity Needs: MYGAs have surrender periods; early withdrawals typically trigger penalties.
• Interest Rate Environment: Your fixed rate is locked in at purchase—if rates rise in the future, your MYGA rate won’t change until the next term.
• Inflation Risk: Since your interest rate is fixed, inflation could erode your purchasing power over time.
• Company Ratings: Choose MYGAs from insurance carriers with strong financial ratings to ensure long-term reliability.

Comparing MYGAs with Other Annuity Options

Fixed Indexed Annuities (FIAs)

• Pros: Potential for higher returns linked to an equity index, while principal remains protected.
• Cons: Upside may be capped or limited by participation rates and fees, making returns less predictable than MYGAs.

Variable Annuities

• Pros: Market-based subaccounts allow higher return potential, but only suitable for those willing to accept investment risk.
• Cons: Returns are not guaranteed and principal can be lost; higher internal fees and complexity are common.

Immediate Annuities

• Pros: Converts a lump sum into immediate income payments, usually for life.
• Cons: No accumulation potential—funds are fully committed once the contract begins.

Is a MYGA Right for You?

MYGAs are best suited for conservative savers who want stable, guaranteed returns and are comfortable locking up their funds for a set term. They can be a valuable component in a diversified retirement plan, especially if you want to avoid market volatility while still achieving better returns than most CDs.

Conclusion

Multi-year guarantee annuities deliver stable, predictable growth with low risk. If you value safety, guaranteed returns, and tax-deferral, a MYGA could be a strategic addition to your retirement strategy. Review your goals, liquidity needs, and interest rate expectations—and always compare options before making a commitment.